FAF

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - National Commercial Services achieved record third-quarter revenue, driven by broad-based strength across 8 of 11 asset classes including data centers, energy, and industrial sectors. - Commercial average revenue per order reached a record for the fifth consecutive quarter, supported by a significant increase in high-premium transactions exceeding $1 million. - Residential purchase and refinance revenues remain constrained by affordability challenges as the 30-year fixed mortgage rate increased approximately 100 basis points over the last six months. - Management is leveraging the cyclical downturn to accelerate the rollout of AI-native platforms, Endpoint and Sequoia, to fundamentally shift title and settlement workflows. - Automation rates for transaction tasks reached 42% in the third quarter, up from 30% in the first quarter, transitioning staff from routine execution to exception management. - The Sequoia platform now completes 17% of California purchase transactions and 34% of refinance transactions, reducing processing time by 2/3 compared to traditional methods. - First American Trust provided a diversified income stream with 39% growth, benefiting from non-captive deposits in ServiceMac and the 1031 Exchange business. - Management anticipates a 'lower for longer' residential origination environment through 2027, with October open purchase orders already down 8% and refinance down 35%. - The company intends to have the majority of direct division revenue and orders running through the Endpoint and Sequoia platforms by the end of 2027. - Strategic goals for the Sequoia platform include automating approximately 80% of refinance and 70% of purchase transactions in markets with title plants. - Revenue for 2027 is expected to be essentially flat year-over-year, with modest commercial growth offsetting anticipated declines in residential revenue. - Investment income is projected to remain a tailwind in 2027, supported by higher short-term rates and the reinvestment of approximately $50 million to $60 million in monthly cash flow. - Recorded $8 million in one-time expenses during the quarter related to operational restructuring and an indirect tax matter. - Management flagged a potential shift in loss reserves, noting that the current 3% provision may increase if the 75 basis point release from prior years slows or ceases. - The dividend was increased by 11% to an annual rate of $2.44 per share to align with the target 40% payout ratio over the cycle. - Change management is identified as the primary execution risk for the national rollout of new technology platforms as staff transition from legacy systems. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management expects margins to remain stable rather than expand in 2027 due to inflationary pressures on personnel and technology costs. - Expansion is contingent on the commercial market exceeding current expectations, as residential volumes are expected to remain at 'rock bottom' levels. - Commercial activity is less sensitive to rates than residential, particularly for large-scale data center and energy projects. - Shorter loan durations (3-5 years) are driving increased transaction and refinance frequency as clients avoid locking in long-term high rates. - Incremental savings from Sequoia are expected to manifest as fulfillment rates improve, without needing to wait for legacy platform decommissioning. - Significant financial benefits from the Endpoint rollout are projected to begin in 2028 following the 2027 national expansion phase. - The bank has reached approximately 95% of internal deposit capacity; future growth will focus on capturing deposits from 20,000 external title agents. - Average deposits grew 38% year-over-year in Q3, though management does not expect this specific pace of expansion to be sustainable long-term.

- Interested in First American Financial Corporation? Here are five stocks we like better. - Commercial strength offset residential weakness: First American's Q3 adjusted EPS rose 5% to $1.78, helped by record commercial title revenue, higher investment income and a 49% increase in commercial refinance premium revenue. Residential purchase and refinance activity remained pressured by mortgage rates near 7.5%. - Residential trends are worsening near term: Early October open purchase orders were down 8%, refinance orders fell 35% and commercial orders declined 7%. Management expects 2027 revenue to be roughly flat with 2026, with modest commercial growth and declining residential revenue. - Automation rollout is accelerating: Endpoint task automation reached 42% in Q3, while Sequoia reduced average human review time for purchase transactions to 56 minutes. First American plans a broader national rollout in 2027, targeting majority adoption in its direct division by year-end and potentially larger efficiency gains beginning in 2028. First American Financial (NYSE:FAF) reported third-quarter adjusted earnings of $1.78 per share, up 5% from a year earlier, as strength in commercial title operations and investment income helped offset continued weakness in residential real estate activity. GAAP earnings were $1.72 per diluted share for the quarter. Chief Executive Officer Mark Seaton said National Commercial Services posted its highest third-quarter revenue on record, supported by broad-based activity across commercial property types and a fifth consecutive quarterly record in average revenue per order. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over Commercial activity included 22 transactions producing more than $1 million of premium each, compared with 12 in the prior-year period. Seaton said only six of those transactions involved data centers, with energy, industrial and multifamily properties also contributing to growth. Commercial refinance premium revenue rose 49% year over year. Title segment revenue totaled $2 billion, up 7% from the third quarter of 2025. Commercial revenue increased 21% to $297 million, driven by a 13% gain in average revenue per order and a 7% rise in closed orders, Chief Financial Officer Matt Wajner said. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? Residential trends remained difficult. Purchase revenue fell 3%, reflecting a 5% decline in closed orders that was partly offset by a 2% increase in average revenue per order. Refinance revenue declined 1%, as a 4% drop in average revenue per order outweighed a 3% increase in closed orders. Refinance represented only 5% of direct revenue during the quarter. Seaton said the 30-year fixed mortgage rate had risen by about 100 basis points over the prior six months to 7.5%, its highest level since the second quarter of 2024. He said higher rates reinforced the company's expectation of a "lower for longer" residential origination environment. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price For the first three weeks of October, First American's open purchase orders were down 8%, refinance orders were down 35%, and commercial orders were down 7%. Despite the order decline, Seaton said the company remained bullish on commercial activity in the fourth quarter, citing a strong pipeline and three transactions already closed with more than $1 million in premium each. Wajner said the company currently expects 2027 revenue to be roughly flat with 2026. It anticipates modest commercial growth and declining residential purchase and refinance revenue, while investment income is expected to provide a tailwind. He said title pre-tax margins are expected to be generally stable next year, though they could face modest pressure if market conditions weaken. Management said it is using the slower residential environment to accelerate development and deployment of its AI-native title and settlement platforms, Endpoint and Sequoia. During the quarter, the company launched the second wave of its Washington Endpoint pilot, expanding to additional users in the Seattle metropolitan area. The automation rate for tasks required to close a transaction rose to 42% in the third quarter, from 34% in the second quarter and 30% in the first quarter. Seaton said First American intends to accelerate a national Endpoint rollout next year and aims to have a majority of direct-division revenue processed through the platform by the end of 2027. He described change management and employee training, rather than technology development, as the principal execution challenge because employees have used the company's legacy FAST system for roughly 25 years. Sequoia, the company's instant title decisioning platform, expanded during the quarter to three additional Southern California counties for purchase transactions and 33 Northern California counties for refinance transactions. Sequoia completed 17% of California purchase transactions processed through Endpoint, up from 11% in the previous quarter, and completed 34% of California refinance transactions processed through the platform. The average human review time for Sequoia purchase transactions fell to 56 minutes in the third quarter, compared with 74 minutes in the second quarter and 83 minutes in the first quarter. Seaton said Sequoia already reduces processing time by about two-thirds versus the traditional process. The company plans to expand Sequoia purchase capabilities across Northern California and into Florida during the fourth quarter. Management's longer-term goal is to automate about 80% of refinance transactions and 70% of purchase transactions in markets where First American maintains title plants. Seaton said the company expects to begin realizing incremental efficiencies as Sequoia expands, while more substantial benefits from the Endpoint and Sequoia initiatives could emerge in 2028 if next year's rollout is executed successfully. Title segment investment income rose 11% to $169 million, supported by higher deposit balances at First American Trust. Wajner said average deposits at the bank increased nearly 38% from the prior-year quarter, primarily due to deposits connected with ServiceMac and the company's 1031 Exchange business. First American Trust benefited from business outside the company's captive title operations, including ServiceMac and 1031 Exchange balances. Seaton said the company has moved about $1 billion in 1031 Exchange deposits to the bank and is pursuing additional deposits from title agents. He said First American has moved approximately 95% of internal deposits that it can place with the bank. Information and other revenue increased 6% to $292 million, largely due to a 31% increase in ServiceMac fee revenue related to growth in its loan portfolio. Personnel costs rose 6% to $574 million, while other operating expenses increased 11% to $306 million, driven primarily by software and production expenses. The title segment generated a 12.4% pre-tax margin, or 12.7% on an adjusted basis. The provision for policy losses and other claims was $45 million, or 3% of title premiums and escrow fees, unchanged from a year earlier. Wajner said the company is reserving 3.75% for the current policy year, with releases from prior-year reserves reducing the reported rate to 3%. Home Warranty revenue was flat at $115 million, while pre-tax income fell 30% to $11 million, primarily because of higher marketing spending aimed at expanding the direct-to-consumer channel. First American raised its common dividend 11% during the quarter to an annualized rate of $2.44 per share. The company repurchased 23,000 shares for $1 million during the third quarter and repurchased another 143,000 shares for $9 million in October through the date of the call. First American Financial Corporation (NYSE: FAF) is a provider of title insurance, settlement services and financial technology solutions for the real estate and mortgage industries. Through its First American Title operations, the company helps protect property owners, lenders and other parties against title defects and related risks during real estate transactions. The company's services include title searches and examination, title insurance policies, escrow and closing services, and transaction coordination. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What First American Financial (FAF) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Image source: The Motley Fool. Thu, Oct. 22, 2026 - Vice President of Investor Relations - Craig Barberio - Chief Executive Officer - Mark Seaton - Chief Financial Officer - Matt Wajner Operator: Greetings, and welcome to the First American Financial Corporation third quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A copy of today's press release is available on First American's website at www.firstam.com/investor. Please note that the call is being recorded and will be available for replay from the company's investor website, and for a short time by dialing 877-660-6853 or 201-612-7415 and enter the conference ID 13763251. We will now turn the call over to Craig Barberio, Vice President of Investor Relations, to make an introductory statement. Craig Barberio: Good morning, everyone, and welcome to First American's earnings conference call for the third quarter of 2026. Joining us today on the call will be our Chief Executive Officer, Mark Seaton, and Matt Wajner, Chief Financial Officer. Some of the statements made today may contain forward-looking statements that do not relate strictly to historical or current fact. These forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these risks and uncertainties, please refer to yesterday's earnings release and the risk factors discussed in our Form 10-K and subsequent SEC filings. Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into the operational efficiency and performance of the company relative to earlier periods and relative to the company's competitors. For more details on these non-GAAP financial measures, including presentation with and reconciliation to the most directly comparable GAAP financials, please refer to yesterday's earnings release, which is available on our website at www.firstam.com. I will now turn the call over to Mark Seaton. Mark Seaton: Thank you, Craig. Our adjusted earnings per share this quarter was $1.78, an increase of 5% from the prior year. Our commercial business had another outstanding quarter, with National Commercial Services generating its highest third-quarter revenue on record. The strength was broad-based, with eight of our 11 asset classes growing year-over-year, and our average revenue per order reaching a record for the fifth consecutive quarter. We closed 22 transactions, generating more than $1 million of premium during the quarter, up from 12 last year. Only six of these transactions were data centers, indicating a broader strength to the market that includes energy, industrial, and multifamily. Commercial refinance was another significant contributor, with premium revenue increasing 49% from the prior year. The residential side of the business remains more challenged. Purchase revenue decreased 3% as affordability constraints continued to weigh on existing home sales. Refinance revenue decreased 1%. Over the last six months, the 30-year fixed mortgage rate has increased approximately 100 basis points to 7.5%, the highest since the second quarter of 2024. Higher mortgage rates reinforce our expectation for a lower for longer residential origination environment. Our business is cyclical, and while higher rates extend the challenging environment we are operating in, they also provide us an opportunity to make transformational changes to our business. We are using this period to deepen our customer relationships and accelerate the rollout of our new AI-native title and settlement platforms. I'll start with Endpoint. During the third quarter, we launched wave two of our Washington pilot, expanding the platform to additional users in the Seattle metro area. Every day provides valuable learnings about both the product and how we train our team to work effectively on the new platform. We continue to make meaningful progress on automating the tasks required to close a transaction. Our automation rate increased from 30% in the first quarter to 34% in the second quarter and reached 42% in the third quarter. This represents a fundamental shift in how title and settlement work gets done. As workflows become more standardized and automated, the role of our people increasingly shifts from executing routine tasks to managing exceptions and focusing on higher-value customer interactions. The result should be less time processing a file and more time spent with customers while also creating a more consistent and efficient experience. We are applying the lessons learned from our Washington pilot to prepare for an accelerated national rollout next year, where we intend to have the majority of our direct division revenue running through Endpoint by the end of 2027. We are also making significant progress with Sequoia, our instant title decisioning platform. During the third quarter, we launched Sequoia for purchase transactions in three additional counties in Southern California. We are now successfully completing 17% of California purchase transactions processed through Endpoint, up from 11% last quarter. We also expanded Sequoia for refinance transactions into 33 additional counties across Northern California and are now completing 34% of California refinance transactions processed through the platform. Another important metric we track is human review time. As we scale Sequoia, we continue to review every order it generates. While the time required for each review continues to decline. The average review time for purchase transactions fell from 83 minutes in the first quarter to 74 minutes in the second quarter and 56 minutes in the third quarter. We expect further improvement, particularly as we introduce new tools in the fourth quarter to streamline the review process. Sequoia already reduces processing time by 2/3 compared with our traditional process, and we expect it to become even more efficient over time. One of First American's most important competitive advantages is our title plant data. We acquire source documents directly from counties, extract and structure the relevant data, and apply our underwriting expertise and advanced technology to produce fully insurable title commitments. As Sequoia matures, we believe we can produce these commitments faster and at a lower cost than anyone else in the industry by leveraging this unique end-to-end capability. Importantly, these commitments are backed by First American's balance sheet, combining speed and efficiency with the financial strength and underwriting certainty our customers expect. Looking ahead in the fourth quarter, we plan to launch Sequoia for purchase transactions throughout Northern California and expand into Florida across both our direct and agency operations. Similar to Endpoint, we expect to be processing a majority of our orders on the Sequoia platform by the end of 2027. Once fully mature, we believe Sequoia will give us the most modern title production platform in the industry, with a goal of automating approximately 80% of refinance transactions and 70% of purchase transactions in markets where we maintain title plants. Another important driver of our earnings is our bank, First American Trust, which provides a growing and increasingly diversified source of investment income. in Q3, title segment investment income grew 11%, driven by a 39% increase at First American Trust, which is benefiting from growth outside our captive title business, including ServiceMac and our 1031 Exchange business. Turning to our outlook, we expect the recent trend of a strong commercial market and a sluggish residential market to continue. For the first three weeks of October, our open purchase orders are down 8%, refinance is down 35%, and commercial is down 7%. Based on our order pipeline, we still believe commercial will have a strong finish to the year. However, given the elevated mortgage rates, we will be in a lower for longer residential origination environment. We expect these trends to continue into 2027, and in that backdrop, we will keep a laser focus on modernizing our capabilities in our core title business and growing our adjacent businesses that are more cyclically resistant, including First American Trust, ServiceMac, Home Warranty, and our data business. Now I will turn the call over to Matt, who will discuss our financial results in greater detail. Matt Wajner: Thank you, Mark. This quarter, we generated GAAP earnings of $1.72 per diluted share. Our adjusted earnings, which exclude the impact of net investment losses and purchase-related intangible amortization, were $1.78 per diluted share. In the title segment, total revenue was $2 billion, up 7% compared with the same quarter of 2025. Commercial revenue was $297 million, a 21% increase over last year, driven by a 13% increase in average revenue per order and a 7% increase in closed orders. Purchase revenue was down 3% during the quarter due to a 5% decline in closed orders, partially offset by a 2% increase in average revenue per order. Refinance revenue was down 1% compared with last year, due to a 4% decline in average revenue per order, partially offset by a 3% increase in closed orders. Refinance accounted for just 5% of our direct revenue this quarter, illustrating how depressed refinance activity remains relative to historical levels. In the agency business, revenue was $868 million, up 9% from last year. Given the reporting lag in agent revenues of approximately one quarter, these results primarily reflect remittances related to second quarter economic activity. Information and other revenues were $292 million during the quarter, up 6% compared with last year, primarily driven by a 31% increase in fee revenue at ServiceMac related to growth in its loan portfolio. Investment income was $169 million in the third quarter, up 11% from last year, primarily driven by growth in our investment portfolio associated with higher deposit balances at First American Trust. Personnel costs were $574 million in the third quarter, up 6% compared with the same quarter of 2025. The increase was mainly due to higher salary and incentive compensation expense. Other operating expenses were $306 million in the quarter, up 11% compared with last year, primarily attributable to increased software expense and higher production expense. Our success ratio for the quarter was 87%, above our 60% target. We recorded $8 million of one-time expenses during the quarter related to an operational restructuring and an indirect tax matter. We also continued to invest in certain businesses outside of our domestic title operations, such as ServiceMac. The investments at ServiceMac are supporting the meaningful growth in its loan portfolio. The provision for policy losses and other claims was $45 million in the third quarter or 3.0% of title premiums and escrow fees, unchanged from the prior year. The third quarter rate reflects an ultimate loss ratio of 3.75% for the current policy year and a net decrease of $11 million in the loss reserve estimate for prior policy years. Interest expense was $31 million in the current quarter, up 27% compared with last year due to higher interest expense related to the growth in deposit balances at First American Trust. Pre-tax margin in the title segment was 12.4% or 12.7% on an adjusted basis. Moving to the Home Warranty segment. Total revenue was $115 million this quarter, flat compared with last year. Pre-tax income was $11 million for the quarter, down 30% compared with last year, primarily attributable to higher marketing expense to drive continued growth in our direct-to-consumer sales channel. The loss provision was 47%, essentially unchanged compared with the third quarter of 2025. Pre-tax margin in the Home Warranty segment was 9.9% or 9.7% on an adjusted basis. The effective tax rate in the quarter was 22.4%, which is slightly below the company's normalized tax rate of 24%. Our debt-to-capital ratio was 30.3%. Excluding secured financings payable, our debt-to-capital ratio was 22.2%. Regarding dividends, we target a payout ratio of 40% over the cycle. Given our current year results and our future outlook, we raised our common stock dividend during the quarter by 11% to an annual rate of $2.44 per share to bring the dividend payout ratio more in line with our target. During the quarter, we repurchased 23,000 shares for a total of $1 million at an average price of $64.24. So far, in October, we repurchased 143,000 shares for a total of $9 million at an average price of $62.40. Now, I would like to turn the call over to the operator to take your questions. Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is from Bose George with KBW. Please proceed with your question. Bose George: Hey, guys. Good morning. Actually just first on expenses. So you guys noted that, I guess, there was the one time of $8 million, but can you just talk a little more broadly about margin expectations in 2027 if resi volumes remain around this $2 trillion or even, I guess, MBA is looking for even less than that, and then commercial potentially flat, just given the comps are going to get pretty challenging. Matt Wajner: Hi, Bose. Thanks for the question. Yeah. So I'll take it by each of the major markets that we have. So where we sit today based on the factors that you just said there and what Mark talked about in his script, our outlook today is essentially flat for revenue year-over-year when we look at 2027 compared to full-year 2026. We expect commercial, like you noted, to be strong next year. As we said, we expect to have a record year this year. We do think we can have modest growth next year because we do think it's going to continue to be strong and could strengthen. So we expect to have some modest growth in commercial next year, which would make 2027 a record year for us. Obviously, the residential market, we're more pessimistic about both for purchase and refi. We would expect revenue to be down next year compared to this year. One tailwind that we expect to see next year is investment income. It's been growing, especially investment income net of interest expense year-to-date has grown about 8% when compared to last year. We expect that to continue to be strong next year given the expectation that rates will be higher, both short-term rates and US Treasury rates. Think should benefit our investment portfolio, both the investment portfolio and the returns we get on our deposits. So we think we'll see some growth in investment income. And then when we turn to expenses, we expect to have the normal inflationary pressures around personnel and other operating expenses, primarily in salaries and technology costs. The other thing that it's too early to say, but when we think about the loss ratio, we've been at 3% for this year, and we were at 3% last year, and that's comprised of 3.75% for the current policy year with a release of prior years of 75 basis points. When we think about our business, it's typically a 4%-5% loss rate over the cycle, and we've been below that for several years now. That's largely due to the fact that during the pandemic, when things were uncertain, we had a little bit of a higher loss rate, and it turned out that those claims didn't manifest. So we've been releasing some of that excess. I think it's likely that at some point here in the near future, we'll either slow the release or cease the release. But any changes will obviously be related to how claims come in. Bose George: Okay, great. That's very helpful. Just to sum that all up, do you feel like the margin ends up being flattish, or could there be room for upside? Matt Wajner: I would say the margin right now, I don't see a lot of room for expansion. I think it's all going to depend on how the commercial market does next year. If commercial exceeds our expectations, we may be able to expand. But right now, I don't see margin expansion next year. Bose George: Okay, great. Thanks for that color. Then just actually one on Sequoia and Endpoint from the expense side. As that rollout continues, does the benefit in terms of the initial benefits on expenses really happen when you shut down fully the other platforms? Is that something that happens potentially in 2028 or is that a little while just as kind of some stuff remains on the older platforms? Mark Seaton: It really depends on the platform we are talking about, whether it is Endpoint or Sequoia. In the case of Sequoia, we will get benefit as we roll out Sequoia. Next year is going to be a big year for us strategically as we roll out both these platforms. We will start to get incremental benefit, for example, Sequoia, as we roll out, as our fulfillment rates improve, as we run more orders through Sequoia, we save on every order that goes through Sequoia. We do not necessarily need to wait for the old platform to be decommissioned before we start saving. I would say it is kind of different but similar with Endpoint. Next year is a big year strategically, and we will start to really kind of start to see the benefits in 2028 if we can successfully execute next year. Bose George: Oh, okay. Great. Thanks. Mark Seaton: Thanks, Bose. Operator: Our next question is from Mark Hughes with Truist Securities. Please proceed with your question. Mark Hughes: Yeah, thank you. Good morning. Mark Seaton: Good morning, Mark. Mark Hughes: On the title pre-tax margin, I think you suggested you don't see margin expansion next year. If you take a little more investment income, a little higher expense, does that mean stable pre-tax? Matt Wajner: Yeah, I would say I think we could be stable to. I think about stable is what I would expect right now. There may be a little bit of pressure, so it could contract a little bit, but right now where we sit today, I don't see considerable deviation. Mark Hughes: How about investment income for the fourth quarter? How is that shaping up? Matt Wajner: I would expect investment income to follow the same growth rate that we saw the first three quarters. When we think about investment income, I think I spoke about it last quarter, but we really look at investment income net of interest expense, since a lot of the growth in investment income has been due to the growth in deposits at the bank, right? So there's an offsetting interest expense. When we look year-to-date, investment income is up 11% year-over-year. Interest expense is up 31%, and the net increased by 8%. I think that net increase of 8% is a good number for Q4. Mark Hughes: Appreciate that. On the commercial side, sounds like you've got good confidence next year. In your experience, how sensitive is that to interest rates if it's higher for longer on rates? What does that mean for refi and then purchase and just maybe as part of that, sounds like refi was quite strong in commercial this quarter. People trying to get under the wire or is that just good underlying activity? Mark Seaton: Fortunately for us, Mark, it's just not as sensitive to interest rates. I'm sure there's a little sensitivity, but I think especially for these big deals like data centers and big energy deals that we're doing just aren't sensitive to rates. We're seeing those deals close. The other thing too on the commercial side, is that you don't have 30-year mortgages, right? Like you do on the residential side. A lot of these commercial loans are shorter in duration now, too. They're typically five years, and I've talked to several clients that are coming in even less than that, just because they think that, hey, rates are high, and why should we take out a 10-year loan? We can do a three-year loan. That just creates more transaction activity, more refinance activity in our pipeline over the next couple of years. Commercial is just more of a stable business when it comes to refinance volume in the residential side, which is obviously good for us. Mark Hughes: Very good. Thank you. Mark Seaton: Thanks, Mark. Operator: Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from Terry Ma with Barclays. Please proceed with your question. Terry Ma: Hey, thank you. Good morning. Maybe just to follow up on the margin outlook for 2027. How should we think about the ability to sustain title margins around this level if residential gets worse and some of the momentum in commercial kind of softens? What additional levers do you have on the expense side if that happens? Mark Seaton: I'll start with that, Terry. I just think when we look at it next year, we're already at just a tough market. The refinance market has been like a one out of 10 here for the last couple of years. Now, as I mentioned, our open refinance orders are down 30%+ in October. But it's from a very low level here. I could say something very similar about the purchase side. The purchase side has been kind of at rock bottom for four years now. Our open orders in October are down 8%. We have levers to pull. But I'll just say that our focus really is on next year in this tough market, and it's going to get a little bit tougher. We just want to get really close to our customers. We want to gain market share in a down market. We want to invest in our business and roll out these new platforms next year. That's going to be the focus to really prepare us for the next cycle. That process is working. In the last 12 months, we've gained 60 basis points of market share, and we've done zero acquisitions. We want to just keep that momentum going. We always have leverage. There's always things we can do, but we're thinking like three to five years out and not next quarter. That's our thought process right now. Terry Ma: Got it. Makes sense. On commercial, any color on what the pipeline kind of looks like as you look out into the fourth quarter? For the ARPA growth this quarter, it did decelerate notably. Anything to call out? Was it kind of mix driven or did you have some deals kind of slip into the next quarter? Any color around that would be helpful. Thank you. Mark Seaton: Well, the first part of that, we are very bullish on commercial here in Q4. Very bullish. We have already closed three deals over $1 million in premium. We have got a really good pipeline heading into Q4. You never really know, right? The last two weeks of December is when you kind of find out how your quarter went for Q4. But the pipeline is just really strong. We have been saying that all year, and we just have a lot of momentum. A lot of momentum. It is really broad-based. It is broad geographies. As Matt said, we think it is going to carry into next year too. So we are very bullish on commercial for Q4. In terms of the ARPA, maybe Matt can touch on that. Matt Wajner: Yeah, thanks. You said the ARPA decelerated from Q2. Just to be clear, ARPA expanded year-over-year. It did decelerate from Q2. We have talked about this before, but when we think about commercial, around 70% of our commercial revenue comes from our National Commercial Services business, which Mark talked about in his prepared remarks, and 30% of it kind of comes from our local business. Actually in our NCS, which is our National Commercial Services business, ARPA was actually up year-over-year and up sequentially. So what that means is there were some large deals that happened last quarter in Q2 outside of centralized commercial, which really strengthened that ARPA. That ARPA was a record ARPA. So it is still a really healthy ARPA. It just did not have the support of maybe some of large deals coming through the non-centralized channel. Terry Ma: Okay. Got it. Thank you. Mark Seaton: Thank you. Operator: Our next question is from Oscar Nieves with Stephens Incorporated. Please proceed with your question. Oscar Nieves: Good morning. You made some comments earlier about the rollout of Endpoint and Sequoia. My question is following up on that. As Endpoint goes national next year, what are the biggest execution risks, and do you expect the transition to weigh on costs before benefits show up potentially in 2028? Mark Seaton: Thanks so much for the question, Oscar. I think the biggest risk with Endpoint, when we initially started Endpoint, the biggest risk was just the, I'd say, technology execution. We're trying to do something that had never been done before, and there were real technological hurdles for us to execute. That risk is kind of gone now. We feel really good about our ability to build products, and we's got a great product design engineering team at Endpoint. The flywheel is really turning with technology, so we feel really good about where our product is, which was the risk. I think the risk now is more on the change management side. Our team has been using FAST, which is our system, for 25 years, and it's an inefficient system today by today's standards. But they're used to it, right? They're used to going on, and they're efficient on an inefficient system. Now we're rolling out a new system, and there's a lot of change management that has to go into that. You're teaching someone who's been on a system, again, for 25 years to use an AI-native platform, and that is the big risk right now, is just change management. It's one of the things that we're testing in these Washington pilots, is not just improving the product, but also, okay, how do we train our people? Are we giving them enough training? Are we doing the right things? That, I think, is going to be the biggest risk going into next year. In terms of just the costs, I don't think there's going to be materially more cost. It's kind of already baked into our run rate. Maybe there'll be some, but it's worth investing to get it right next year. I don't think it'll be a material increase in cost next year relative to that initiative. Oscar Nieves: That's very helpful. My next one is on the bank, on the growth of the bank. You've mentioned for a few quarters now how First American Trust continues to grow. Can you comment on how big you think that part of the business can become relative to the company and how you think about its sensitivity to rates and the deposit mix? Mark Seaton: Well, I'll start with that, and then Matt can talk about the sensitivity to rates and the deposit mix. I'll just say that our bank is a big strategic advantage for us for two reasons. One is it makes our operations a lot more efficient. One of the things as a settlement company is we deal with escrow funds all day long, and the fact that we have a bank that's tightly integrated into our operations, we can open accounts, close accounts, move money faster than anybody. So there's an operational benefit. The second piece is there's a big financial benefit too, in the sense that we can push certain deposits to our own bank and earn a spread on those. It has been growing pretty much every single year. I think we've pretty much maxed out, not quite, but I would say 95% of our own internal deposits that we can push to First American Trust, we do. Really, the growth prospects from here on out are what I'll call these non-title deposits. We are going to. There's 20,000 different title agents out there that use their own banks. We're going to them and saying, "Hey, why don't you bank with First American Trust?" We're having some success with that. We also, when we acquired ServiceMac, they have deposits too that we can push to First American Trust. We talked about this last quarter, but we never had our 1031 Exchange balances at First American Trust, but we built a product, and now we've got about $1 billion deposits at First American Trust. We are growing these non-title deposits, I think, very successfully. How big can it get? I don't really have an answer to that. What I do know is every single month, we're signing up new agents and we're growing our deposit base. I'll hand it over to Matt to talk about the sensitivity. Matt Wajner: Yeah. Then regarding the sensitivity of the bank, most of the bank's assets are invested in the bond portfolio. The portfolio, you can think about it as having a five-year duration, and roughly $50 million-$60 million is thrown off in cash every month that we reinvest. That's a way to think about it if you look at the forward curve, and then think about that amount getting reinvested at those rates. Then just one thing on the growth. Year-over-year, when we look at average deposits in Q3 2026 versus Q3 2025, deposits grew almost 38%, and almost all of that came, like Mark said, from our sub-servicing business, ServiceMac, and our 1031 Exchange business. I wouldn't expect that pace of growth to continue. But there's opportunities to continue to expand. I just don't think it would continue to expand at that rate. Oscar Nieves: Okay. That helps. My last one is, turning now to the reserves. You mentioned that title losses typically run in the 4%-5% range over the cycle, and that you've been below that for several years following COVID. If those releases, because you have released some of the reserves, if those releases slow or stop, how should we think about the provision going forward? How much of today's rate is the release, and where does the current year rate settle? Matt Wajner: Currently, we're reserving at 3%. The way we think about that is 3.75% is for what we call the current policy year. For new policies that we're issuing, we reserve at 3.75%. As we release reserves that are unneeded from prior years, that's the 75 basis points reduction that gets us to 3%. We would think of it in the current environment for new policies as 3.75% is kind of the right loss reserve right now. Oscar Nieves: Okay. Super helpful. Thank you so much. Mark Seaton: Thanks, Oscar. Operator: Thank you. That is all the time we have for questions today. That concludes this morning's call. We would like to remind listeners that today's call will be available for replay on the company's website or by dialing 877-660-6853 or 201-612-7415 and enter the conference ID 1376 3251. The company would like to thank you for your participation. This concludes today's conference call. Before you buy stock in First American Financial, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and First American Financial wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. First American (FAF) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

SANTA ANA, Calif., October 21, 2026--(BUSINESS WIRE)--First American Financial Corporation (NYSE: FAF), a premier provider of title, settlement and risk solutions for real estate transactions and the leader in the digital transformation of its industry, today announced financial results for the third quarter ended Sept. 30, 2026. Current Quarter Highlights - Earnings per diluted share of $1.72, or $1.78 per share on an adjusted basis - Net investment losses of $2 million, or 1 cent per diluted share - Purchase-related intangible amortization of $7 million, or 5 cents per diluted share - Total revenue of $2.1 billion, up 5 percent compared with last year - Adjusted total revenue of $2.1 billion, up 7 percent compared with last year - Title Insurance and Services segment investment income of $169 million, up 11 percent compared with last year - Title Insurance and Services segment pretax margin of 12.4 percent, or 12.7 percent on an adjusted basis - Commercial revenues of $297 million, up 21 percent compared with last year - Home Warranty segment pretax margin of 9.9 percent, or 9.7 percent on an adjusted basis - Debt-to-capital ratio of 30.3 percent, or 22.2 percent excluding secured financings payable of $808 million - Cash flow from operations of $238 million compared with $273 million last year - Raised common stock dividend by 11 percent to an annual rate of $2.44 per share - Repurchased 23,149 shares for a total of $1 million at an average price of $64.24 - In the fourth quarter, through October 21, repurchased 143,254 shares for a total of $9 million at an average price of $62.40 Selected Financial Information($ in millions, except per share data) | | Three Months Ended | | | September 30, | | | 2026 | | | 2025 | Total revenue | | $ | 2,084.6 | | | $ | 1,978.9 | Income before taxes | | $ | 227.6 | | | $ | 247.0 | | | | | | | Net income | | $ | 177.0 | | | $ | 189.6 | Net income per diluted share | | $ | 1.72 | | | $ | 1.84 | | | | | | | Adjusted net income | | $ | 183.4 | | | $ | 174.9 | Adjusted net income per diluted share | | $ | 1.78 | | | $ | 1.70 | Total revenue for the third quarter of 2026 was $2.1 billion, up 5 percent compared with the third quarter of 2025. Net income in the current quarter was $177 million, or $1.72 per diluted share, compared with net income of $190 million, or $1.84 per diluted share, in the third quarter of 2025. Adjusted net income in the current quarter was $183 million, or $1.78 per diluted share, compared with $175 million, or $1.70 per diluted share, in the third quarter of last year. Net investment losses in the current quarter were $2 million, or 1 cent per diluted share, compared with net investment gains of $26 million, or 20 cents per diluted share, in the third quarter of last year. Purchase-related intangible amortization in both the current and prior year quarters was $7 million, or 5 cents per diluted share. The effective tax rate this quarter was 22.4 percent. "Continued growth in our commercial business and higher investment income drove our earnings this quarter," said Mark Seaton, chief executive officer at First American Financial Corporation. "The recent increase in mortgage rates reinforces our expectation for a lower-for-longer residential origination market. We will use this environment to deepen our customer relationships and execute the rollout of our new AI-native title and settlement platforms, which will enhance the customer experience, improve operating efficiency and position First American for stronger earnings growth as the market recovers." Title Insurance and Services($ in millions, except average revenue per order) | | Three Months Ended | | | September 30, | | | 2026 | | | 2025 | Total revenues | | $ | 1,972.9 | | | $ | 1,835.9 | | | | | | | Income before taxes | | $ | 244.1 | | | $ | 236.2 | Pretax margin | | | 12.4 | % | | | 12.9 | % Adjusted pretax margin | | | 12.7 | % | | | 12.9 | % | | | | | | Title open orders(1) | | | 175,600 | | | | 191,300 | Title closed orders(1) | | | 134,900 | | | | 141,800 | | | | | | | U.S. Commercial | | | | | | Total revenues | | $ | 297.4 | | | $ | 245.9 | Open orders | | | 28,900 | | | | 28,200 | Closed orders | | | 16,300 | | | | 15,300 | Average revenue per order | | $ | 18,200 | | | $ | 16,100 | (1) U.S. direct title insurance orders only. Total revenues for the Title Insurance and Services segment were $2.0 billion in the third quarter, up 7 percent compared with the same quarter of 2025. Total adjusted revenues in the current quarter were $2.0 billion, up 8 percent compared with last year. Direct premiums and escrow fees were $643 million, an increase of 7 percent compared with the third quarter of last year, driven by a 13 percent increase in the average revenue per order closed, partially offset by a 5 percent decline in the number of direct title orders closed in our domestic operations. The average revenue per direct title order rose to $4,304, primarily due to an increase in the average revenue per order for commercial and purchase transactions, and a shift in the mix to higher premium commercial transactions. Agent premiums, which are recorded on approximately a one-quarter lag relative to direct premiums, were $868 million, up 9 percent compared with last year. Information and other revenues were $292 million during the quarter, up $16 million, or 6 percent, compared with last year, primarily driven by 31 percent growth in the company's subservicing business. Investment income was $169 million in the third quarter, up $16 million, or 11 percent, compared with the same quarter last year. The increase was primarily driven by higher interest income from the company's investment portfolio, partially offset by a decline in interest income from escrow balances. Net investment gains were $0.2 million in the current quarter, compared with gains of $6 million in the same quarter last year that were primarily attributable to changes in the fair value of marketable equity securities. Personnel costs were $574 million in the third quarter, up $31 million, or 6 percent, compared with the same quarter of 2025. The increase in personnel costs was primarily attributable to higher salary and incentive compensation expense. Other operating expenses of $306 million in the current quarter were up $31 million, or 11 percent, compared with the third quarter of 2025, primarily due to an increase in software expense and higher production expense. The provision for policy losses and other claims was $45 million in the third quarter, or 3.0 percent of title premiums and escrow fees, unchanged from the prior year. The third quarter rate reflects an ultimate loss rate of 3.75 percent for the current policy year and a net decrease of $11 million in the loss reserve estimate for prior policy years. Depreciation and amortization expense was $53 million in the third quarter, unchanged compared with the same period last year. Interest expense was $31 million in the current quarter, up $7 million, or 27 percent, compared with last year, primarily due to higher interest expense on deposit balances at the company's bank subsidiary. The Title Insurance and Services segment posted pretax income of $244 million in the third quarter, compared with pretax income of $236 million in the third quarter of 2025. Pretax margin was 12.4 percent in the current quarter, compared with 12.9 percent last year. Adjusted pretax margin was 12.7 percent in the current period, compared with 12.9 percent last year. Home Warranty($ in millions) | | Three Months Ended | | | September 30, | | | 2026 | | | 2025 | Total revenues | | $ | 114.7 | | | $ | 114.6 | | | | | | | Income before taxes | | $ | 11.3 | | | $ | 16.2 | Pretax margin | | | 9.9 | % | | | 14.1 | % Adjusted pretax margin | | | 9.7 | % | | | 13.5 | % Total revenues for the Home Warranty segment were $115 million in the third quarter, flat compared with last year. The segment posted pretax income of $11 million this quarter, down 30 percent compared with last year, primarily attributable to higher marketing expense to drive continued growth in our direct-to-consumer sales channel. The claims loss rate in the current quarter was 47 percent, virtually unchanged compared with last year. Home Warranty's pretax margin was 9.9 percent this quarter, compared with 14.1 percent last year. Corporate The Corporate segment pretax loss was $28 million in the third quarter, compared with a loss of $5 million last year. Excluding net investment gains and losses, the Corporate pretax loss was $26 million in the current quarter, compared with a $24 million loss in the third quarter of last year. Teleconference/Webcast First American's third quarter 2026 results will be discussed in more detail on Thursday, Oct. 22, 2026, at 11 a.m. EDT, via teleconference. The toll-free dial-in number is +1-877-407-8293. Callers from outside the United States may dial +1-201-689-8349. The live audio webcast of the call will be available on First American's website at www.firstam.com/investor. An audio replay of the conference call will be available through Nov. 5, 2026, by dialing +1-201-612-7415 and using the conference ID 13763251. An audio archive of the call will also be available on First American's investor website. About First American First American Financial Corporation (NYSE: FAF) is a premier provider of title, settlement and risk solutions for real estate transactions. With its combination of financial strength and stability built over 135 years, innovative proprietary technologies, and unmatched data assets, the company is leading the digital transformation of its industry. First American also provides data products to the title industry and other third parties; valuation products and services; mortgage subservicing; home warranty products; banking, trust and wealth management services; and other related products and services. With total revenue of $7.5 billion in 2025, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2026, First American was named one of the 100 Best Companies to Work For by Great Place to Work® and Fortune Magazine for the eleventh consecutive year. More information about the company can be found at www.firstam.com. Website Disclosure First American posts information of interest to investors at www.firstam.com/investor. This includes opened and closed title insurance order counts for its U.S. direct title insurance operations, which are posted approximately 10 to 12 days after the end of each month. Forward-Looking Statements Certain statements made in this press release and the related management commentary contain, and responses to investor questions may contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and may contain the words "believe," "anticipate," "expect," "intend," "plan," "predict," "estimate," "project," "will be," "will continue," "will likely result," or other similar words and phrases or future or conditional verbs such as "will," "may," "might," "should," "would," or "could." These forward-looking statements include, without limitation, statements regarding future operations, performance, financial condition, prospects, plans and strategies. These forward-looking statements are based on current expectations and assumptions that may prove to be incorrect. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include, without limitation: interest rate fluctuations; changes in conditions of the real estate markets; volatility in the capital markets; unfavorable economic conditions; impairments in the company's goodwill or other intangible assets; failures at financial institutions where the company deposits funds; regulatory oversight and changes in applicable laws and government regulations, including privacy and data protection laws; heightened scrutiny by legislators and regulators of the company's title insurance and services segment and certain other of the company's businesses; regulation of title insurance rates; limitations on access to public records and other data; severe weather conditions, health crises, terrorist attacks and other catastrophes; changes in relationships with large mortgage lenders and government-sponsored enterprises; changes in measures of the strength of the company's title insurance underwriters, including ratings and statutory capital and surplus; losses in the company's investment portfolio or venture investment portfolio; material variance between actual and expected claims experience; provision of capital to subsidiaries that could affect the company's liquidity position; defalcations, increased claims or other costs and expenses attributable to the company's use of title agents; any inadequacy in the company's risk management framework or use of models; systems damage, failures, interruptions, cyberattacks and intrusions, or unauthorized data disclosures; innovation efforts of the company and other industry participants and any related market disruption; errors and fraud involving the transfer of funds; failures to recruit and retain qualified employees; the company's use of a global workforce; inability of the company to fulfill parent company obligations and/or pay dividends; inability to realize anticipated synergies or produce returns that justify investment in acquired businesses; a reduction in the deposits at the company's federal savings bank subsidiary; claims of infringement or inability to adequately protect the company's intellectual property; and other factors described in the company's annual report on Form 10-K for the year ended December 31, 2025, including under the caption Risk Factors in Item 1A of Part I, and in the company's subsequent quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made. The company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Use of Non-GAAP Financial Measures This news release and related management commentary contain certain financial measures that are not presented in accordance with generally accepted accounting principles (GAAP), including an adjusted debt to capitalization ratio, personnel and other operating expense ratios, success ratios, net operating revenues, adjusted revenues, adjusted pretax income, adjusted pretax margin, adjusted net income, and adjusted earnings per share. The company is presenting these non-GAAP financial measures because they provide the company's management and investors with additional insight into the financial leverage, operational efficiency and performance of the company relative to earlier periods and relative to the company's competitors. The company does not intend for these non-GAAP financial measures to be a substitute for any GAAP financial information. In this news release, these non-GAAP financial measures have been presented with, and reconciled to, the most directly comparable GAAP financial measures. Investors should use these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. First American Financial Corporation Summary of Consolidated Financial Results and Selected Information (in millions, except per share amounts and title orders, unaudited) | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | | 2026 | | 2025 | | 2026 | | 2025 Total revenues | | $ | 2,084.6 | | | $ | 1,978.9 | | $ | 6,039.9 | | | $ | 5,402.5 | | | | | | | | Income before income taxes | | $ | 227.6 | | | $ | 247.0 | | $ | 673.3 | | | $ | 538.8 Income tax expense | | | 51.0 | | | | 57.1 | | | 152.8 | | | | 127.0 Net income | | | 176.6 | | | | 189.9 | | | 520.5 | | | | 411.8 Less: Net (loss) income attributable to noncontrolling interests | | | (0.4 | ) | | | 0.3 | | | (0.1 | ) | | | 1.9 Net income attributable to the Company | | $ | 177.0 | | | $ | 189.6 | | $ | 520.6 | | | $ | 409.9 | | | | | | | | Net income per share attributable to stockholders: | | | | | | | | Basic | | $ | 1.72 | | | $ | 1.84 | | $ | 5.06 | | | $ | 3.96 Diluted | | $ | 1.72 | | | $ | 1.84 | | $ | 5.04 | | | $ | 3.95 | | | | | | | | Cash dividends declared per share | | $ | 0.61 | | | $ | 0.55 | | $ | 1.71 | | | $ | 1.63 | | | | | | | | Weighted average common shares outstanding: | | | | | | | | Basic | | | 102.7 | | | | 102.8 | | | 102.8 | | | | 103.5 Diluted | | | 103.2 | | | | 103.1 | | | 103.2 | | | | 103.8 | | | | | | | | Selected Title Insurance Segment Information | | | | | | | | Title orders opened(1) | | | 175,600 | | | | 191,300 | | | 546,700 | | | | 547,136 Title orders closed(1) | | | 134,900 | | | | 141,800 | | | 392,100 | | | | 390,376 Paid title claims | | $ | 55.2 | | | $ | 42.9 | | $ | 158.8 | | | $ | 128.6 | | | | | | | | (1) U.S. direct title insurance orders only. | | | | | | | | | | | | | | | | First American Financial Corporation Selected Consolidated Balance Sheet Information (in millions, unaudited) | | | | | | | | September 30, | | | December 31, | | | 2026 | | | 2025 | Cash and cash equivalents | | $ | 1,731.1 | | | $ | 1,387.3 | Investments | | | 10,737.5 | | | | 9,394.3 | Goodwill and other intangible assets, net | | | 1,895.6 | | | | 1,919.3 | Total assets | | | 17,982.8 | | | | 16,228.8 | Reserve for claim losses | | | 1,134.6 | | | | 1,169.6 | Notes and contracts payable | | | 1,546.8 | | | | 1,545.4 | Total stockholders' equity | | $ | 5,386.9 | | | $ | 5,499.5 | | | | | | | | | First American Financial Corporation Segment Information (in millions, unaudited) | | | | | | | | Three Months Ended | | | | Title | | Home | | Corporate September 30, 2026 | | Consolidated | | Insurance | | Warranty | | (incl. Elims.) Revenues | | | | | | | | Direct premiums and escrow fees | | $ | 749.8 | | | $ | 642.8 | | $ | 107.1 | | $ | (0.1 | ) Agent premiums | | | 868.4 | | | | 868.4 | | | — | | | — | Information and other | | | 297.9 | | | | 292.2 | | | 5.8 | | | (0.1 | ) Net investment income | | | 170.1 | | | | 169.3 | | | 1.6 | | | (0.8 | ) Net investment (losses) gains | | | (1.6 | ) | | | 0.2 | | | 0.2 | | | (2.0 | ) | | | 2,084.6 | | | | 1,972.9 | | | 114.7 | | | (3.0 | ) Expenses | | | | | | | | Personnel costs | | | 597.4 | | | | 574.1 | | | 22.4 | | | 0.9 | Premiums retained by agents | | | 695.6 | | | | 695.6 | | | — | | | — | Other operating expenses | | | 343.6 | | | | 306.4 | | | 28.2 | | | 9.0 | Provision for policy losses and other claims | | | 95.1 | | | | 45.3 | | | 50.2 | | | (0.4 | ) Depreciation and amortization | | | 54.7 | | | | 53.3 | | | 1.3 | | | 0.1 | Premium taxes | | | 24.2 | | | | 22.8 | | | 1.3 | | | 0.1 | Interest | | | 46.4 | | | | 31.3 | | | — | | | 15.1 | | | | 1,857.0 | | | | 1,728.8 | | | 103.4 | | | 24.8 | Income (loss) before income taxes | | $ | 227.6 | | | $ | 244.1 | | $ | 11.3 | | $ | (27.8 | ) | | | | | | | | Three Months Ended | | | | Title | | Home | | Corporate September 30, 2025 | | Consolidated | | Insurance | | Warranty | | (incl. Elims.) Revenues | | | | | | | | Direct premiums and escrow fees | | $ | 708.0 | | | $ | 601.5 | | $ | 106.6 | | $ | (0.1 | ) Agent premiums | | | 798.8 | | | | 798.8 | | | — | | | — | Information and other | | | 282.0 | | | | 276.1 | | | 5.7 | | | 0.2 | Net investment income | | | 163.8 | | | | 153.1 | | | 1.4 | | | 9.3 | Net investment gains | | | 26.3 | | | | 6.4 | | | 0.9 | | | 19.0 | | | | 1,978.9 | | | | 1,835.9 | | | 114.6 | | | 28.4 | Expenses | | | | | | | | Personnel costs | | | 574.9 | | | | 542.9 | | | 21.4 | | | 10.6 | Premiums retained by agents | | | 640.1 | | | | 640.1 | | | — | | | — | Other operating expenses | | | 309.2 | | | | 275.6 | | | 24.4 | | | 9.2 | Provision for policy losses and other claims | | | 90.8 | | | | 42.0 | | | 50.0 | | | (1.2 | ) Depreciation and amortization | | | 54.8 | | | | 53.5 | | | 1.3 | | | (0.0 | ) Premium taxes | | | 22.2 | | | | 20.9 | | | 1.3 | | | (0.0 | ) Interest | | | 39.9 | | | | 24.7 | | | — | | | 15.2 | | | | 1,731.9 | | | | 1,599.7 | | | 98.4 | | | 33.8 | Income (loss) before income taxes | | $ | 247.0 | | | $ | 236.2 | | $ | 16.2 | | $ | (5.4 | ) | | | | | | | | | | | | | | First American Financial Corporation | Segment Information | (in millions, unaudited) | | | | | | | | | | | | | Nine Months Ended | | | | | Title | | | Home | | | Corporate | September 30, 2026 | | Consolidated | | | Insurance | | | Warranty | | | (incl. Elims.) | Revenues | | | | | | | | | | | | Direct premiums and escrow fees | | $ | 2,204.1 | | | $ | 1,889.1 | | | $ | 315.0 | | | $ | - | Agent premiums | | | 2,447.5 | | | | 2,447.5 | | | | — | | | | — | Information and other | | | 880.8 | | | | 856.4 | | | | 17.9 | | | | 6.5 | Net investment income | | | 506.2 | | | | 487.5 | | | | 4.2 | | | | 14.5 | Net investment gains (losses) | | | 1.3 | | | | 39.3 | | | | 1.2 | | | | (39.2 | ) | | | 6,039.9 | | | | 5,719.8 | | | | 338.3 | | | | (18.2 | ) Expenses | | | | | | | | | | | | Personnel costs | | | 1,779.9 | | | | 1,693.0 | | | | 65.4 | | | | 21.5 | Premiums retained by agents | | | 1,956.4 | | | | 1,956.4 | | | | — | | | | — | Other operating expenses | | | 1,006.1 | | | | 902.8 | | | | 74.8 | | | | 28.5 | Provision for policy losses and other claims | | | 260.2 | | | | 130.1 | | | | 129.1 | | | | 1.0 | Depreciation and amortization | | | 162.9 | | | | 158.7 | | | | 4.1 | | | | 0.1 | Premium taxes | | | 67.1 | | | | 63.4 | | | | 3.6 | | | | 0.1 | Interest | | | 134.0 | | | | 88.4 | | | | — | | | | 45.6 | | | | 5,366.6 | | | | 4,992.8 | | | | 277.0 | | | | 96.8 | Income (loss) before income taxes | | $ | 673.3 | | | $ | 727.0 | | | $ | 61.3 | | | $ | (115.0 | ) | | | | | | | | | | | | Nine Months Ended | | | | | Title | | | Home | | | Corporate | September 30, 2025 | | Consolidated | | | Insurance | | | Warranty | | | (incl. Elims.) | Revenues | | | | | | | | | | | | Direct premiums and escrow fees | | $ | 1,973.3 | | | $ | 1,661.5 | | | $ | 311.9 | | | $ | (0.1 | ) Agent premiums | | | 2,169.9 | | | | 2,169.9 | | | | — | | | | — | Information and other | | | 794.3 | | | | 776.4 | | | | 17.8 | | | | 0.1 | Net investment income | | | 459.2 | | | | 437.9 | | | | 3.4 | | | | 17.9 | Net investment gains (losses) | | | 5.8 | | | | (2.5 | ) | | | (0.5 | ) | | | 8.8 | | | | 5,402.5 | | | | 5,043.2 | | | | 332.6 | | | | 26.7 | Expenses | | | | | | | | | | | | Personnel costs | | | 1,652.7 | | | | 1,550.7 | | | | 62.6 | | | | 39.4 | Premiums retained by agents | | | 1,739.1 | | | | 1,739.1 | | | | — | | | | — | Other operating expenses | | | 896.9 | | | | 799.8 | | | | 68.8 | | | | 28.3 | Provision for policy losses and other claims | | | 242.8 | | | | 114.9 | | | | 130.5 | | | | (2.6 | ) Depreciation and amortization | | | 160.3 | | | | 156.3 | | | | 3.9 | | | | 0.1 | Premium taxes | | | 58.8 | | | | 55.2 | | | | 3.6 | | | | — | Interest | | | 113.1 | | | | 67.5 | | | | — | | | | 45.6 | | | | 4,863.7 | | | | 4,483.5 | | | | 269.4 | | | | 110.8 | Income (loss) before income taxes | | $ | 538.8 | | | $ | 559.7 | | | $ | 63.2 | | | $ | (84.1 | ) | | | | | | | | | | | | | | | | First American Financial Corporation Reconciliation of Non-GAAP Financial Measures (in millions, except margin and per share amounts, unaudited) Consolidated | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | | 2026 | | 2025 | | 2026 | | 2025 | | | | | | | | Total revenues | | $ | 2,084.6 | | | $ | 1,978.9 | | | $ | 6,039.9 | | | $ | 5,402.5 | Non-GAAP adjustments: | | | | | | | | Less: Net investment (losses) gains | | | (1.6 | ) | | | 26.3 | | | | 1.3 | | | | 5.8 | Adjusted total revenues | | $ | 2,086.2 | | | $ | 1,952.6 | | | $ | 6,038.6 | | | $ | 5,396.7 | | | | | | | | | Pretax income | | $ | 227.6 | | | $ | 247.0 | | | $ | 673.3 | | | $ | 538.8 | Non-GAAP adjustments: | | | | | | | | Less: Net investment (losses) gains | | | (1.6 | ) | | | 26.3 | | | | 1.3 | | | | 5.8 | Plus: Purchase-related intangible amortization | | | 6.7 | | | | 7.1 | | | | 20.1 | | | | 20.5 | Adjusted pretax income | | $ | 235.9 | | | $ | 227.8 | | | $ | 692.1 | | | $ | 553.5 | | | | | | | | | Pretax margin | | | 10.9 | % | | | 12.5 | % | | | 11.1 | % | | | 10.0 | % Non-GAAP adjustments: | | | | | | | | Less: Net investment (losses) gains | | | (0.1 | )% | | | 1.2 | % | | | (0.0 | )% | | | 0.1 | % Plus: Purchase-related intangible amortization | | | 0.3 | % | | | 0.4 | % | | | 0.4 | % | | | 0.4 | % Adjusted pretax margin | | | 11.3 | % | | | 11.7 | % | | | 11.5 | % | | | 10.3 | % | | | | | | | | Net income | | $ | 177.0 | | | $ | 189.6 | | | $ | 520.6 | | | $ | 409.9 | Non-GAAP adjustments, net of tax: | | | | | | | | Less: Net investment (losses) gains | | | (1.2 | ) | | | 20.2 | | | | 1.0 | | | | 4.4 | Plus: Purchase-related intangible amortization | | | 5.2 | | | | 5.5 | | | | 15.5 | | | | 15.7 | Adjusted net income | | $ | 183.4 | | | $ | 174.9 | | | $ | 535.1 | | | $ | 421.2 | | | | | | | | | Earnings per diluted share (EPS) | | $ | 1.72 | | | $ | 1.84 | | | $ | 5.04 | | | $ | 3.95 | Non-GAAP adjustments, net of tax: | | | | | | | | Less: Net investment (losses) gains | | $ | (0.01 | ) | | $ | 0.20 | | | $ | 0.01 | | | $ | 0.04 | Plus: Purchase-related intangible amortization | | $ | 0.05 | | | $ | 0.05 | | | $ | 0.15 | | | $ | 0.15 | Adjusted EPS | | $ | 1.78 | | | $ | 1.70 | | | $ | 5.18 | | | $ | 4.06 | | | | | | | | | Purchase-related intangible amortization includes amortization of noncompete agreements, customer relationships, and trademarks acquired in business combinations. Totals may not sum due to rounding. First American Financial Corporation Reconciliation of Non-GAAP Financial Measures (in millions except margin, unaudited) By Segment | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | | 2026 | | 2025 | | 2026 | | 2025 Title Insurance and Services Segment | | | | | | | | Total revenues | | $ | 1,972.9 | | | $ | 1,835.9 | | | $ | 5,719.8 | | | $ | 5,043.2 | Non-GAAP adjustments: | | | | | | | | Less: Net investment gains (losses) | | | 0.2 | | | | 6.4 | | | | 39.3 | | | | (2.5 | ) Adjusted total revenues | | $ | 1,972.7 | | | $ | 1,829.5 | | | $ | 5,680.5 | | | $ | 5,045.7 | | | | | | | | | Pretax income | | $ | 244.1 | | | $ | 236.2 | | | $ | 727.0 | | | $ | 559.7 | Non-GAAP adjustments: | | | | | | | | Less: Net investment gains (losses) | | | 0.2 | | | | 6.4 | | | | 39.3 | | | | (2.5 | ) Plus: Purchase-related intangible amortization | | | 6.6 | | | | 7.0 | | | | 20.0 | | | | 20.4 | Adjusted pretax income | | $ | 250.5 | | | $ | 236.8 | | | $ | 707.7 | | | $ | 582.6 | | | | | | | | | Pretax margin | | | 12.4 | % | | | 12.9 | % | | | 12.7 | % | | | 11.1 | % Non-GAAP adjustments: | | | | | | | | Less: Net investment gains (losses) | | | 0.0 | % | | | 0.3 | % | | | 0.6 | % | | | (0.0 | )% Plus: Purchase-related intangible amortization | | | 0.3 | % | | | 0.3 | % | | | 0.4 | % | | | 0.4 | % Adjusted pretax margin | | | 12.7 | % | | | 12.9 | % | | | 12.5 | % | | | 11.5 | % | | | | | | | | Home Warranty Segment | | | | | | | | Total revenues | | $ | 114.7 | | | $ | 114.6 | | | $ | 338.3 | | | $ | 332.6 | Non-GAAP adjustments: | | | | | | | | Less: Net investment gains (losses) | | | 0.2 | | | | 0.9 | | | | 1.2 | | | | (0.5 | ) Adjusted total revenues | | $ | 114.5 | | | $ | 113.7 | | | $ | 337.1 | | | $ | 333.1 | | | | | | | | | Pretax income | | $ | 11.3 | | | $ | 16.2 | | | $ | 61.3 | | | $ | 63.2 | Non-GAAP adjustments: | | | | | | | | Less: Net investment gains (losses) | | | 0.2 | | | | 0.9 | | | | 1.2 | | | | (0.5 | ) Adjusted pretax income | | $ | 11.1 | | | $ | 15.3 | | | $ | 60.1 | | | $ | 63.7 | | | | | | | | | Pretax margin | | | 9.9 | % | | | 14.1 | % | | | 18.1 | % | | | 19.0 | % Non-GAAP adjustments: | | | | | | | | Less: Net investment gains (losses) | | | 0.2 | % | | | 0.6 | % | | | 0.3 | % | | | (0.1 | )% Adjusted pretax margin | | | 9.7 | % | | | 13.5 | % | | | 17.8 | % | | | 19.1 | % | | | | | | | | Purchase-related intangible amortization includes amortization of noncompete agreements, customer relationships, and trademarks acquired in business combinations. Totals may not sum due to rounding. | | | | | | | | | | | | | | | | First American Financial Corporation Expense and Success Ratio Reconciliation Title Insurance and Services Segment ($ in millions, unaudited) | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | | 2026 | | 2025 | | 2026 | | 2025 Total revenues | | $ | 1,972.9 | | | $ | 1,835.9 | | | $ | 5,719.8 | | | $ | 5,043.2 | Less: Net investment gains (losses) | | | 0.2 | | | | 6.4 | | | | 39.3 | | | | (2.5 | ) Net investment income | | | 169.3 | | | | 153.1 | | | | 487.5 | | | | 437.9 | Premiums retained by agents | | | 695.6 | | | | 640.1 | | | | 1,956.4 | | | | 1,739.1 | Net operating revenues | | $ | 1,107.8 | | | $ | 1,036.3 | | | $ | 3,236.6 | | | $ | 2,868.7 | | | | | | | | | | | | | | | | | Personnel and other operating expenses | | $ | 880.5 | | | $ | 818.5 | | | $ | 2,595.8 | | | $ | 2,350.5 | Ratio (% net operating revenues) | | | 79.5 | % | | | 79.0 | % | | | 80.2 | % | | | 81.9 | % Ratio (% total revenues) | | | 44.6 | % | | | 44.6 | % | | | 45.4 | % | | | 46.6 | % | | | | | | | | | | | | | | | | Change in net operating revenues | | $ | 71.5 | | | | | $ | 367.9 | | | Change in personnel and other operating expenses | | | 62.0 | | | | | | 245.3 | | | Success Ratio(1) | | | 87 | % | | | | | 67 | % | | | | | | | | | | (1) Change in personnel and other operating expenses divided by change in net operating revenues. First American Financial Corporation Supplemental Direct Title Insurance Order Information(1) (unaudited) | | | | | | | | | | | | Q326 | | Q226 | | Q126 | | Q425 | | Q325 Open Orders per Day | | | | | | | | | | Purchase | | | 1,305 | | | | 1,516 | | | | 1,429 | | | | 1,100 | | | | 1,375 | Refinance | | | 645 | | | | 662 | | | | 838 | | | | 768 | | | | 771 | Refinance as % of residential orders | | | 33 | % | | | 30 | % | | | 37 | % | | | 41 | % | | | 36 | % Commercial | | | 452 | | | | 465 | | | | 451 | | | | 444 | | | | 441 | Default and other | | | 342 | | | | 297 | | | | 280 | | | | 346 | | | | 402 | Total open orders per day | | | 2,744 | | | | 2,941 | | | | 2,998 | | | | 2,657 | | | | 2,989 | | | | | | | | | | | Closed Orders per Day | | | | | | | | | | Purchase | | | 1,014 | | | | 1,072 | | | | 839 | | | | 953 | | | | 1,062 | Refinance | | | 517 | | | | 555 | | | | 616 | | | | 629 | | | | 503 | Refinance as % of residential orders | | | 34 | % | | | 34 | % | | | 42 | % | | | 40 | % | | | 32 | % Commercial | | | 255 | | | | 246 | | | | 249 | | | | 289 | | | | 238 | Default and other | | | 322 | | | | 273 | | | | 262 | | | | 375 | | | | 413 | Total closed orders per day | | | 2,108 | | | | 2,145 | | | | 1,966 | | | | 2,246 | | | | 2,216 | | | | | | | | | | | Average Revenue per Order (ARPO)(2) | | | | | | | | | Purchase | | $ | 3,766 | | | $ | 3,900 | | | $ | 3,740 | | | $ | 3,704 | | | $ | 3,689 | Refinance | | | 992 | | | | 1,050 | | | | 1,130 | | | | 1,146 | | | | 1,034 | Commercial | | | 18,222 | | | | 19,980 | | | | 17,851 | | | | 18,605 | | | | 16,119 | Default and other | | | 293 | | | | 503 | | | | 126 | | | | 366 | | | | 343 | | | | | | | | | | | Total ARPO | | $ | 4,304 | | | $ | 4,572 | | | $ | 4,229 | | | $ | 4,350 | | | $ | 3,801 | | | | | | | | | | | Business Days | | | 64 | | | | 64 | | | | 61 | | | | 63 | | | | 64 | | | | | | | | | | | (1) U.S. operations only. | | | | | | | | | | (2) Average revenue per order (ARPO) defined as direct premiums and escrow fees divided by closed title orders. Totals may not sum due to rounding. View source version on businesswire.com: https://www.businesswire.com/news/home/20261021111996/en/ Contacts Media Contact: Marcus Ginnaty Corporate Communications First American Financial Corporation 714-250-3298 Investor Contact: Craig Barberio Investor Relations First American Financial Corporation 714-250-5214

First American Financial (FAF) came out with quarterly earnings of $1.78 per share, missing the Zacks Consensus Estimate of $1.85 per share. This compares to earnings of $1.7 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -3.78%. A quarter ago, it was expected that this financial services company would post earnings of $1.8 per share when it actually produced earnings of $2.08, delivering a surprise of +15.56%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. First American Financial, which belongs to the Zacks Insurance - Property and Casualty industry, posted revenues of $2.08 billion for the quarter ended September 2026, missing the Zacks Consensus Estimate by 1.06%. This compares to year-ago revenues of $1.98 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. First American Financial shares have added about 7.9% since the beginning of the year versus the S&P 500's gain of 12.7%. While First American Financial has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for First American Financial was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.81 on $2.07 billion in revenues for the coming quarter and $7.09 on $8.13 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Insurance - Property and Casualty is currently in the top 29% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Heritage Insurance (HRTG), another stock in the same industry, has yet to report results for the quarter ended September 2026. The results are expected to be released on October 28. This property and casualty insurance holding company is expected to post quarterly earnings of $1.04 per share in its upcoming report, which represents a year-over-year change of -36.2%. The consensus EPS estimate for the quarter has been revised 21.9% lower over the last 30 days to the current level. Heritage Insurance's revenues are expected to be $217.39 million, up 2.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First American Financial Corporation (FAF) : Free Stock Analysis Report Heritage Insurance Holdings, Inc. (HRTG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Title insurance provider First American Financial (NYSE:FAF) met Wall Street's revenue expectations in Q3 2026, with sales up 5.3% year on year to $2.08 billion. Its non-GAAP profit of $1.78 per share was 3.4% below analysts' consensus estimates. Is now the time to buy First American Financial? Find out in our full research report. - Revenue: $2.08 billion vs analyst estimates of $2.09 billion (5.3% year-on-year growth, in line) - Pre-tax Profit: $227.6 million (10.9% margin) - Adjusted EPS: $1.78 vs analyst expectations of $1.84 (3.4% miss) - Market Capitalization: $6.77 billion "Continued growth in our commercial business and higher investment income drove our earnings this quarter," said Mark Seaton, chief executive officer at First American Financial Corporation. "The recent increase in mortgage rates reinforces our expectation for a lower-for-longer residential origination market. We will use this environment to deepen our customer relationships and execute the rollout of our new AI-native title and settlement platforms, which will enhance the customer experience, improve operating efficiency and position First American for stronger earnings growth as the market recovers." Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial (NYSE:FAF) provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally. Insurers earn revenue three ways. The core insurance business itself, often called underwriting and represented in the income statement as premiums earned, is one way. Investment income from investing the "float" (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities is the second way. Fees from various sources such as policy administration, annuities, or other value-added services are the third. First American Financial's demand was weak over the last five years as its revenue fell at a 2.1% annual rate. This was below our standards and suggests it's a lower quality business. Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. First American Financial's annualized revenue growth of 17.4% over the last two years is above its five-year trend, suggesting its demand recently accelerated. This quarter, First American Financial grew its revenue by 5.3% year on year, and its $2.08 billion of revenue was in line with Wall Street's estimates. Net premiums earned made up 80.8% of the company's total revenue during the last five years, meaning First American Financial barely relies on non-insurance activities to drive its overall growth. Our experience and research show the market cares primarily about an insurer's net premiums earned growth as investment and fee income are considered more susceptible to market volatility and economic cycles. ALSO WORTH WATCHING: Nvidia's Quiet Partner. Nvidia's chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all. Every AI server needs specialized infrastructure the chip companies don't make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE. When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what's ceded to reinsurers as a risk mitigation and transfer strategy. First American Financial's net premiums earned has declined by 2.4% annually over the last five years, much worse than the broader insurance industry and in line with its total revenue. When analyzing First American Financial's net premiums earned over the last two years, we can see that growth accelerated to 16.1% annually. Since two-year net premiums earned grew slower than total revenue over this period, it's implied that other line items such as investment income grew at a faster rate. These additional streams do play a key role in the bottom line, but their impact can vary. While some firms have excelled in consistently investing their float, sudden shifts in the fixed income and equity markets can heavily sway short-term performance. We struggled to find many positives in these results. Its EPS missed and its revenue was in line with Wall Street's estimates. Overall, this was a weaker quarter. The stock remained flat at $66.51 immediately after reporting. Should you buy the stock or not? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

The market expects Kinsale Capital Group, Inc. (KNSL) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on October 22, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. This company is expected to post quarterly earnings of $4.95 per share in its upcoming report, which represents a year-over-year change of -5%. Revenues are expected to be $478.84 million, down 3.8% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 0.44% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Kinsale Capital Group, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +2.56%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination indicates that Kinsale Capital Group will most likely beat the consensus EPS estimate. While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Kinsale Capital Group would post earnings of $5.1 per share when it actually produced earnings of $5.54, delivering a surprise of +8.63%. Over the last four quarters, the company has beaten consensus EPS estimates four times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Kinsale Capital Group appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Another stock from the Zacks Insurance - Property and Casualty industry, First American Financial (FAF), is soon expected to post earnings of $1.85 per share for the quarter ended September 2026. This estimate indicates a year-over-year change of +8.8%. Revenues for the quarter are expected to be $2.11 billion, up 6.5% from the year-ago quarter. The consensus EPS estimate for First American Financial has been revised 0.4% higher over the last 30 days to the current level. However, an equal Most Accurate Estimate has resulted in an Earnings ESP of 0.00%. This Earnings ESP, combined with its Zacks Rank #2 (Buy), makes it difficult to conclusively predict that First American Financial will beat the consensus EPS estimate. The company beat consensus EPS estimates in each of the trailing four quarters. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report First American Financial Corporation (FAF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The market expects First American Financial (FAF) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended September 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 21. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. This financial services company is expected to post quarterly earnings of $1.85 per share in its upcoming report, which represents a year-over-year change of +8.8%. Revenues are expected to be $2.13 billion, up 7.5% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 0.37% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For First American Financial, the Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%. On the other hand, the stock currently carries a Zacks Rank of #2. So, this combination makes it difficult to conclusively predict that First American Financial will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that First American Financial would post earnings of $1.8 per share when it actually produced earnings of $2.08, delivering a surprise of +15.56%. Over the last four quarters, the company has beaten consensus EPS estimates four times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. First American Financial doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Another stock from the Zacks Insurance - Property and Casualty industry, Chubb (CB), is soon expected to post earnings of $6.42 per share for the quarter ended September 2026. This estimate indicates a year-over-year change of -14.3%. Revenues for the quarter are expected to be $16.72 billion, up 3.6% from the year-ago quarter. The consensus EPS estimate for Chubb has been revised 0.1% lower over the last 30 days to the current level. However, a lower Most Accurate Estimate has resulted in an Earnings ESP of -0.10%. When combined with a Zacks Rank of #3 (Hold), this Earnings ESP makes it difficult to conclusively predict that Chubb will beat the consensus EPS estimate. The company beat consensus EPS estimates in each of the trailing four quarters. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First American Financial Corporation (FAF) : Free Stock Analysis Report Chubb Limited (CB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research